Rationing Poor Consumers to Reduce Prices
We study how rationing in the public sector influences prices in the private sector. A private firm uses consumers’ cost information for cream-skimming. Only rationed consumers consider purchasing from the private firm. Rich consumers are more willing to pay for an indivisible good, such as a health treatment, than poor consumers. The public supplier decides on a rationing rule, and then the private firm reacts by setting prices. In equilibrium, the public supplier must ration both rich and poor consumers. Supplying all poor consumers leaves only rich consumers to the private market. The firm reacts by setting high prices because all available consumers have high willingness to pay. Rationing some poor consumers provides an incentive for the firm to reduce prices because some consumers with low willingness to pay are potential customers.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||Sep 2008|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.bu.edu/econ/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pau Olivella Cunill & Pedro Pita Barros, 2000.
"Waiting Lists and Patient Selection,"
Econometric Society World Congress 2000 Contributed Papers
0283, Econometric Society.
- Barros, Pedro Luis Pita, 2000. "Waiting Lists and Patient Selection," CEPR Discussion Papers 2519, C.E.P.R. Discussion Papers.
- Pedro Pita Barros & Pau Olivella, . "Waiting Lists And Patient Selection," UFAE and IAE Working Papers 444.99, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Ching-to Albert MA & Simona Grassi, 2011.
"Public Sector Rationing And Private Sector Selection,"
Boston University - Department of Economics - Working Papers Series
WP2011-021, Boston University - Department of Economics.
- Simona Grassi & Ching‐To Albert Ma, 2012. "Public Sector Rationing and Private Sector Selection," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 14(1), pages 1-34, 02.
- Simona Grassi & Ching-to Albert Ma, 2009. "Public Sector Rationing and Private Sector Selection," Boston University - Department of Economics - Working Papers Series wp2009-a, Boston University - Department of Economics.
- Michael Hoel & Erik Magnus Sæther, 2001.
"Public Health Care with Waiting Time: The Role of Supplementary Private Health Care,"
CESifo Working Paper Series
562, CESifo Group Munich.
- Hoel, Michael & Saether, Erik Magnus, 2003. "Public health care with waiting time: the role of supplementary private health care," Journal of Health Economics, Elsevier, vol. 22(4), pages 599-616, July.
- Hoel, Michael, 2007. "What should (public) health insurance cover?," Journal of Health Economics, Elsevier, vol. 26(2), pages 251-262, March.
When requesting a correction, please mention this item's handle: RePEc:bos:wpaper:wp2008-015. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gillian Gurish)
If references are entirely missing, you can add them using this form.